33 Major Fail Tales From Startups That Died

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Photo: L. Marie via Flickr

We love a good entrepreneurial success story – entrepreneur as protagonist overcomes obstacles and builds a thriving, successful company (and become wealthy while doing so).  We want to hear about, learn from and even replicate what they’ve done.However, this survivorship bias is problematic. Jason Cohen of Smart Bear Software does a nice job articulating this issue stating:

“The fact that you are learning only from success is a deeper problem than you imagine…drawing conclusions only from data that is available or convenient and thus systematically biasing your results.”

Luckily, the startup community often courageously shares their stories – even when things don’t end well.

This list was compiled by ChubbyBrain and was suggested by Founders @Fail.

Article: StoryLog, 'How My Startup Failed'

Excerpt: There was no doubt about it: I had discovered The Next Big Thing. Like Edison and the light bulb, like Gates and the pc operating system, I would launch a revolution that would transform society while bringing me wealth and fame. I was about to become the first person in America to sell condom key chains.

Article: Marc Hedlund's Blog, Why Wesabe Lost to Mint

Company: Wesabe

Author: Marc Hedlund

Excerpt: Even before we launched, we heard about other people working on similar ideas, and a slew of companies soon launched in our wake. None of them really seemed to get very far, though, and we were considered the leader in online personal finance until September 2007, when Mint launched at, and won, the first TechCrunch 40 conference.

From that point forward we were considered in second place at best, and they overshadowed our site and everyone else's, too. Two years later, Mint was acquired by Intuit, makers of Quicken (and after Mint's launch, the makers of Quicken Online) for $170 million. A bit less than a year later, Wesabe shut down.

Failure #7: A Build-Your-Own YouTube/Yelp, etc. had issues with money, traction, team, and vision

Failure #8: There were a lot of mistakes with research, picking teams, office space and money

Article: Boompa.com Launch Postmortem, Part 1: Research, Picking a Team, Office Space and Money

Company: Boompa.com

Excerpt: While there are many documents on the web covering this subject, most are written after the fact of success and don't provide the 'holy shit, we just quit our jobs' perspective that is going to be common with anyone who doesn't have the contacts to get involved with VCs. A year from now this story will either be a testament to our methodology or an embarrassing reminder of all the mistakes we made.

Failure #9: They gave away a service for free, and ran out of cash to pay the bills

Article: End of the Road for Xmarks

Company: Xmarks (company seems semi-dead given recent pledgebank setup)

Author: Todd Agulnick

Excerpt: For four years we have offered the synchronisation service for no charge, predicated on the hypothesis that a business model would emerge to support the free service. With that investment thesis thwarted, there is no way to pay expenses, primarily salary and hosting costs. Without the resources to keep the service going, we must shut it down.

Article: YouCastr -- A Post-Mortem

Company: YouCastr

Author: Ariel Diaz

Excerpt: We started the company because we liked the idea and wanted to do something entrepreneurial. We weren't in love with the idea or market we were going after, and weren't core users of our product. We worked really hard getting it off the ground despite this, but it made it more difficult to sustain the energy and to understand the best product choices.

Post-Mortem Title: Lessons from Kiko, web 2.0 startup, about Its Failure

Company: Kiko

Author: Mahesh M Piddshetti

Excerpt: An AJAX calendar is not fundamentally a bad idea (I think we, Google calendar, 30boxes, calendar hub, and many others prove that). I don't think we were doomed from the beginning; I just think we were too slow at times, and focused on the wrong thing at times. I think Kiko is still a good idea that can yield a lot of value to its users, but I won't be the one to take it there.

Post-Mortem Title: Lessons Learned: Startup Failure Part 1

Company: Overto

Author: Pawel Brodzinski

Excerpt: The thin line between life and death of internet service is the number of users. For the initial period of time the numbers were growing systematically. Then we hit the ceiling of what we could achieve effortlessly. It was a time to do some marketing. Unfortunately none of us were skilled in that area.

Failure #17: The founders butted heads, and their motivation disintegrated

Article: Why We Shut NewsTilt Down

Company: NewsTilt

Author: Paul Biggar

Excerpt: None of these problems should have been unassailable, which leads us to why NewsLabs failed as a company:

  • Nathan and I had major communication problems
  • we weren't intrinsically motivated by news and journalism
  • making a new product required changes we could not make
  • our motivation to make a successful company got destroyed by all of the above

Article: Aftermath

Company: Diffle

Excerpt: If I were to do another startup, I'd be stuck with it for the next 4-10 years, it'd have to be profitable within about 2 to avoid running out of money, and this is all in a very uncertain economic climate. And I have no cofounder, so I'd be doing everything myself until I could afford employees, and then I'd have to build a company culture. There's no fun in that - I might be able to pull it off and get rich, but it'd eat up all of my twenties, probably all my friends, and possibly all my sanity. Not worth it

Article: 6 reasons why my VC funded startup did fail

Author: Stephan Schmidt

Excerpt: So the most important thing is to sell -- a fact lots of startups forget. And we did too. After much thought it comes down to these six reasons why we failed (beside the obvious one that the VC market imploded when we needed money and no one was able to get any funding):

  1. We didn't sell anything
  2. We didn't sell anything
  3. We didn't sell anything
  4. The market window was not yet open
  5. We focused too much on technology
  6. We had the wrong business model

Failure #20: If you're an entrepreneur or investor considering content, think again

Article: 10 Lessons from a Failed Startup

Company: PlayCafe

Author: Mark Goldenson

Excerpt: I would advise any entrepreneur or investor considering content to think twice, as Howard Lindzon from Wallstrip warned us. Content is an order of magnitude harder than technology with an order less upside; no YouTube producer will earn within a hundredth of $1.65 billion. This will only become more true as DVRs and media-sharing reduce revenues and pay-for-performance ads eliminate inefficient ad spend, of which there is a lot. The main and perhaps only reason to do content should be the love of creating it.

Article: Lessons from our Failed Startup

Company: SMSnoodle

Excerpt: Discuss your startup idea with not only friends,but also other people who are quite strangers to you. I promise you will definitely learn a lot here.The concept of your idea getting stolen is 99.99% impossible.Visit barcamps, hackerspace, geek terminals and bounce your ideas to different people.

We failed to do this step and hence overestimated the Singapore market.

Failure #23: Trouble with hiring, timing, and frugality is a double-edged sword

Article: Untitled Partners Post-Mortem

Company: Untitled Partners

Author: Jordan Cooper

Excerpt: Our hope was to aggregate demand around works of art being sold through the existing channels in the $70B art market, and then to enable our customers to cooperatively purchase and own the art they loved. On March 9th, we made the difficult decision to shutdown the Company and return almost 50% of the capital we raised to our investors.

Failure #23: Money comes between people and everyone over-estimates their own company contributions

Article: A Happy Failure Story: Lessons Learned From My First Startup

Company: SubMat

Author: Laurent Krentz

Excerpt: My philosophy was to get as far as possible with a small seed round. To do this, I thought keeping my day job would allow to spend the money wisely on product or marketing actions. Wrong. Quit your job (if you can), and get down to business. Period. You need to be dedicated to your project, meet people, talk about it, code and hack this sh*t out of it. At the end of the day, I was doing both things wrong: my day job, and my startup.

Article: Imercive Post-Mortem

Company: Imercive

Author: Keith B. Nowak

Excerpt: For one, we stuck with the wrong strategy for too long. I think this was partly because it was hard to admit the idea wasn't as good as I originally thought or that we couldn't make it work. If we had been honest with ourselves earlier on we may have been able to pivot sooner and have enough capital left to properly execute the new strategy. I believe the biggest mistake I made as CEO of imercive was failing to pivot sooner.

Article: Meetro Post Mortem

Company: Meetro (aka Lefora)

Author: Paul

Excerpt: We could have gone about trying to fix Meetro but the team was just ready to move on. Raising money on the flat growth we had was nearly impossible. Plus I knew that in order to keep the tight-knit team we had built together, we needed to shift focus for sanity sake. People (myself included) just felt beat up. We knew that fixing these issues would involve a complete rearchitecturing of the code, and people just weren't excited about the idea enough anymore to do it right.

Article: Post Mortem on a Failed Product

Company: eCrowds

Author: David Cummings

Excerpt: As the product became more and more complex, the performance degraded. In my mind, speed is a feature for all web apps so this was unacceptable, especially since it was used to run live, public websites. We spent hundreds of hours trying to speed of the app with little success. This taught me that we needed to having benchmarking tools incorporated into the development cycle from the beginning due to the nature of our product.

Article: Co-Founder Potts Shares Lessons Learned from Backfence Bust

Company: Backfence

Author: Mark Potts | Mark Glaser

Excerpt: Hyper-local is really hard. Don't kid yourself. You don't just open the doors and hit critical mass. We knew that from the jump. It takes a lot of work to build a community. Look carefully at most hyper-local sites and see just how much posting is really being done, especially by members of the community as opposed to be the sites' operators. Anybody who's run a hyper-local site will tell you that it takes a couple of years just to get to a point where you've truly got a vibrant online community. It takes even longer to turn that into a viable business. Unfortunately, for a variety of reasons, Backfence was unable to sustain itself long enough to reach that point.

Article: What an Entrepreneur Learned from His Failed Startup (interview)

Company: Sedna Wireless

Author: Rajiv Poddar | Kamla Bhatt

Excerpt: Finances were just one part of the story. The other part was that we failed to execute our own plans. Both external factors (e.g. the hardware ecosystem in India) and internal reasons (e.g. the expertise of the team) played a role. With money it would have lasted a bit more longer.

Article: Couldery Shouldery

Company: Lookery

Author: Scott Rafer

Excerpt: We exposed ourselves to a huge single point of failure called Facebook. I've ranted for years about how bad an idea it is for startups to be mobile-carrier dependent. In retrospect, there is no difference between Verizon Wireless and Facebook in this context. To succeed in that kind of environment requires any number of resources. One of them is clearly significant outside financing, which we'd explicitly chosen to do without. We could have and should have used the proceeds of the convertible note to get out from under Facebook's thumb rather to invest further in the Facebook Platform.

Article: How To Develop a Product Nobody Wants

Company: ChubbyBrain

Excerpt: For lack of a better analogy, we were trying to build Yelp for investor-backed startups and middle-market private companies. In your mind, replace the thousands of local businesses on Yelp with private companies and layer on some wiki elements and you'll have a decent idea of what we were envisioning: a place where people can find and provide information about private companies/startups, and also review them.

Awesome idea, right?! WRONG! Where the heck are we going to get all the data on these companies?!

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